GM General Motors Company

By Nora Naughton 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 26, 2019).

After 40 days of picketing, the United Auto Workers union is ending its nationwide strike at General Motors Co.

The UAW said Friday it has secured a new labor deal with GM, resolving one of the nation's longest private-sector walkouts in years and allowing the Detroit car company to restart its U.S. factories.

GM workers voted 57% in favor of approving the new four-year agreement, which includes better wages, hefty signing bonuses and a commitment from GM to invest $7.7 billion in its U.S. manufacturing operations, securing 9,000 jobs.

The new labor accord, covering more than 46,000 blue-collar workers, will allow GM to move forward with closing three U.S. factories, including a massive assembly plant in Lordstown, Ohio. Workers will return to work immediately, and GM plans to resume production as soon as possible at more than 30 U.S. factories that have sat idle for six weeks, a company spokesman said.

The car company will schedule overtime to make up for lost production, giving workers who have been without a paycheck for six weeks a way to recoup their finances.

Among the auto maker's first priorities is to fill back-ordered parts at dealerships, which have had to delay repairs. GM plans to have its plants running full-tilt again early next week, the spokesman said.

The new contract represents a victory for UAW President Gary Jones, who will next turn the union's attention to contract talks at Ford Motor Co. UAW negotiators will use the GM agreement as a template for reaching similar deals with the other two U.S. car companies, a tactic typical in pattern bargaining.

The strike, the company's longest nationwide walkout in nearly a half century, crippled GM's U.S. manufacturing operations and rippled through the broader economy, resulting in temporary layoffs for thousands of non-UAW workers. The financial toll on GM and the Midwest economy will continue to linger well after the strike ends.

Analysts estimate the disruption to GM's U.S. factories, as well as those in Mexico and Canada that were idled because of parts shortages, has cost GM roughly 300,000 units of lost vehicle production that it will now have to make up.

The damage to GM's bottom line is likely to exceed $3 billion with most of the hit to be reported in the fourth quarter, according to Bank of America. On top of that, the new union agreement is expected to tack on $100 million or more a year in higher labor costs, industry analysts estimate.

The strike's impact also cut deep for GM's auto-parts suppliers. Many were forced to idle their own plants and temporarily lay off workers. For some, such as Magna International Inc. and Lear Corp., the work stoppage could shave more than 3% from their 2019 earnings, according to analysts at Citigroup Inc.

GM workers won some considerable gains in this latest round of bargaining, including better pay for new hires, a path to full-time status for temps and no changes to the employee health-care contribution, currently at 3% and far lower than the average for other private-sector workers. They also will receive a one-time $11,000 bonuses for ratifying the contract.

Still, some UAW members had reservations, expecting more after spending six weeks on strike without a company paycheck.

Aaron Fowlkes, a production worker at GM's Orion Township, Mich., assembly plant, said he isn't totally sold on the new contract, mostly because he doesn't feel it goes far enough on job security, but voted yes anyway. "If we send it back, what's our end game?" he said. "I don't know if there's anything else we can ask for that is feasible."

Some of the gains achieved by the UAW at GM will be a harder sell at Ford and Fiat Chrysler, which aren't as strong financially and have different workforce needs, labor experts say.

With 56,000 UAW-represented employees, Ford's hourly workforce is much larger than GM's, and it is confronting a fast-rising health-care tab that is expected to exceed $1 billion annually next year.

Fiat Chrysler is likely to have more trouble absorbing costs associated with the changes on temporary workers and new-hire pay, mostly because it has a relatively newer workforce, with many members still not earning the top wage. The company has about 47,200 UAW-represented workers, and about half of those working in manufacturing earn less than full pay of nearly $30 an hour.

"This pattern is pretty costly because one of the big things GM won is closing plants that will save billions," said Kristin Dziczek, an economist and labor expert at the Center for Automotive Research in Ann Arbor, Mich. "The other two don't want to close plants. If you don't want to close plants, what is the win for the company?"

(END) Dow Jones Newswires

October 26, 2019 02:47 ET (06:47 GMT)

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